NOMINEE DIRECTOR

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shivaram (Querist)
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22 October 2010 A Public company is presently having 4 Directors.of which 1 is Mng. Dir and all others are Nominee Directors.

Has the company violated the provisions of the Company Law? If so what is the remedy for it?

Also,if the constitution of the Directors is insufficient as per the Company law,what about the transactions entered by the Directors with the same constitution. If such contracts are invalid, then what the Company should do?

Ajay Mishra

Ajay Mishra (Expert)
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23 October 2010 Hi
The Nominee Director is not counted for determining the strength of the Board or for the purpose of retirement of directors by rotation in the case of nominees and institutions under which nominate them by virtue of powers vested in them under the enactments under which they have been constituted.
In other case such nominees will be counted for the purpose of determining the strength of the Board of Director and for determining the number of directors liable to retire by rotation.
Nominee director is considered as independent director for the purpose of provisions of Corporate Governance applicable to listed company.
In short, your company made default the provisions of sction 255 and 256 of the Companies Act, 1956

Regards

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